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Collar Calculations: Adding Protective Puts to our Covered Call Trades

Covered call exit strategies play a major role in mitigating losses in our BCI methodology. In most cases, we can keep losses to a minimum, turn losses into gains and enhance profits as well. Some covered call writers want the security of protecting against a catastrophic gap-down which can occur rarely. With the current market […]

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Volatility and the Post-Crash Decade

For covered call writers and sellers of cash-secured puts, rising volatility has two faces. It is our friend in that our premiums will be higher as they are directly related to the implied volatility of the underlying securities. It is our enemy as we will be subjected to greater downside risk. So, which is it… […]

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technical analysis for covered call writing

Technical Charts: A Picture is Worth 1000 Words- A Real-Life Example with The Wendy’s Company (NASDAQ: WEN)

Technical analysis is one of the 3 screens we use for stock selection when selling options. The other two are fundamental analysis and common-sense principles (like minimum trading volume). In August 2019, Nick wrote to me about a trade opportunity he thought he missed with WEN. He attached a technical chart followed by a question. […]

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put-selling calculations

Comparing Call and Put Strategies with Paylocity Holding Corporation (NASDAQ: PCTY)

Covered call writing or selling cash-secured puts… which is the best strategy? Well, they both offer great opportunities to generate cash-flow in a low-risk manner. I favor the former in normal to bull market environments and the latter in bear and volatile markets. On June 24, 2019, PCTY passed our rigorous screening requirements to earn […]

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technical analysis for covered call writing

Creating “Dividends” for Non-Dividend Stocks: A Real-Life Example with PAYC

Covered call writing can be beneficial to us in a variety of circumstances. This article will highlight how this strategy can be implemented to create a dividend-like cash flow for stocks that currently offer no dividend income. This can be particularly useful for those who will only purchase dividend stocks and miss out on other […]

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option Greeks

20%/10% Guidelines for Covered Call Writing and Put-Selling: Same Name, Different Circumstances

Exit strategies for our covered call writing and put-selling portfolios allow us to mitigate potential losses and enhance gains to even higher levels. In my books and DVDs, I detail the 20%/10% guidelines as one of the exit strategies available to us for both strategies. Although the name is the same, the circumstances are different […]

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covered call writing exit strategies

Comparing the Cost-to-Close with Initial Trade Goal

When we enter our covered call trades, we make our stock and option selection based on our initial time-value return goal (2% – 4% for 1-month expirations in my case). If the strike moves deep in-the-money as share price accelerates, we may consider closing both legs of the trade or rolling the option out or […]

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Ask Alan

Ask Alan #167 What is “Seeking Alpha?”

Alan answers a question posed by Mary, who asks: Alan,Alan, I follow the site Seeking Alpha as well as your BCI site. Can you give your thoughts on how the BCI methodology seeks to beat the market? I’m really enjoying your material. Thanks, Mary ——— It’s the 2nd Wednesday of the month. Time for another […]

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poor man's covered call calculations

Protective Puts and The Poor Man’s Covered Call

The Poor Man’s Covered Call (PMCC) is a covered call writing-like strategy where the underlying security is a LEAPS options (1 -2 years expirations) rather than the stock itself. The technical term is a long call diagonal debit spread. Since the cost of the option is lower than the price of the stock, the return […]

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Comparing ITM Calls and OTM Puts in Bear Markets

Covered call writing and selling cash-secured puts are both outstanding low-risk strategies that can outperform the overall market on a consistent basis. I am on record as favoring covered call writing in normal to bull markets and include put-selling in bear markets. In normal to bull markets, covered call writing gives us the flexibility to […]

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